Nestle to acquire Gerber for $5.5 billion; eyes US expansion

Mumbai: Nestle SA, the world''s largest food company, will acquire baby US food brand Gerber from Swiss drugmaker Novartis AG for $5.5 billion in cash.

Gerber, with annual sales of $1.6 billion, holds almost four-fifths of the US market for infant purees.

Nestle will add Gerber''s annual sales to its nutrition unit, which makes Jenny Craig diet food, the Vevey, Switzerland-based company reported on its website.

The maker of Neslac and Good Start infant formulas spent almost $4 billion last year buying nutrition brands with sales growth surpassing the rest of the food industry, including a Novartis unit that makes enriched meals for the sick.

Based in Parsippany, New Jersey, Gerber was founded in 1928 by Daniel Gerber, who began mass-producing strained fruit for infants at a cannery. Gerber currently sells 190 products in 80 countries, and had an operating profit of $307 million last year.

The transaction is expected to close in the second half of the year and is subject to regulatory approval, the companies said.

Nestle''s full-year nutrition food sales, which include PowerBar energy snacks and Clinutren products, rose 6.1 per cent at to almost 6 billion Swiss francs ($4.9 billion). The profit margin is 16.9 per cent for the unit, compared with 13.5 per cent for the company overall.